MGM Energy has the following interests in the Mackenzie Delta:
1. Chevron/BP Farmout Lands. MGM Energy has farmed-in on four exploration licenses and concessions owned by Chevron Resources Canada and BP Canada Energy Ltd. Pursuant to this farm-in, MGM Energy has agreed to drill 11 wells in total, two of which were drilled in the 2007 winter drilling season (both of which were dry holes), to spend an additional $50 million on seismic data, and to assume certain other costs. As a result of those activities and expenditures, MGM Energy will earn a 50% interest in any discoveries made, and a 50% interest in three discoveries previously made by Chevron/BP on the same lands.
MGM Energy is currently planning its 2008 winter drilling program. We expect to drill three wells on Exploration Licenses 427 and 394. Exact locations have yet to be determined. In addition, MGM Energy expects to conduct a seismic data acquisition program over portions of these exploration licenses as well as over other portions of our lands.
2. Umiak SDL. MGM Energy is the owner of a 60% working interest in, and is the operator of, the proposed Umiak SDL. The Umiak field is located within Exploration License 384, which technically expired January 5, 2006 but subsists until the SDL is issued. The Government of Canada (through the Department of Indian Affairs and Northern Development) will declare a Significant Discovery License or Licenses following the completion of the NEB review of the extent of the field. We currently estimate that the Umiak discovery has a mean size (contingent gas resource) of approximately 265 Bcf (net). MGM Energy has no current plans to drill additional wells into the Umiak field in 2008.
3. EL 434. MGM Energy is the owner of a 60% working interest in, and is the operator of, Exploration License 434. This license expires May 2, 2011, unless a well is drilled prior to that date. The work commitment associated with this EL is $40.2 million (gross). A number of prospects have been identified on this EL, and while no activity is currently planned for the winter of 2008, we anticipate that one or more wells will be drilled on this license prior to its expiry.
4. Other SDLs. The Corporation is the owner of small fractional interests in 14 SDLs, both onshore and offshore in the Mackenzie Delta. While these SDLs typically have discovered contingent resources associated with them, MGM Energy believes that they are equally important for the access to seismic data that is associated with this ownership, as well as the window they provide on development throughout the Mackenzie Delta.
In addition to interests in land, MGM Energy also owns or has access to substantial seismic data over much of the Mackenzie Delta and certain of its properties.